Millions of student loan borrowers are bracing to have up to 15% of their wages garnished by the government

Student loan borrowers who are in default are at risk of having up to 15% of their wages garnished, the Education Department announced earlier this year, although it never gave an exact date when those collections would begin other than saying “later this summer.” In May, the Education Department resumed student loan collections, ending the relief measures of the pandemic era when borrowers had some reprieve. 

The Education Department did not respond to Fortune’s request for comment on when wage garnishment would begin or whether borrowers would be notified ahead of time.

“Wage garnishment for defaulted student loans is very possible,” Ashley Morgan, debt and bankruptcy attorney and owner of Ashley F Morgan Law PC, told Fortune. “It is a scary concept since they can take 15% of after-tax income.” Morgan has worked with thousands of clients to resolve debt and credit issues. 

Wage garnishment would be a major shift from Biden-era policies that allowed for student loan deferment and forgiveness in some cases. 

How many and which student loan borrowers are affected

There are nearly 2 million federal student loan borrowers who are at immediate risk of wage garnishment. The Trump administration has only previously disclosed wage garnishment would begin “later this summer,” and Labor Day weekend traditionally marks the end of the season. 

Scott Buchanan, executive director of the Student Loan Servicing Alliance, told CNBC on Aug. 22 that wage garnishment programs take time to set up and he expects at least a month before garnishment actually begins. 

An additional 1 million to 2 million could be in default in the coming months, bringing the total of student loan borrowers risking wage garnishment to up to 4 million. Being in default means the borrower has failed to make payments for 270 days, or about nine months, “so you are not at risk for garnishment if you are just a few months behind and not in actual default,” Morgan said. 

After 90 days, delinquency is reported to credit bureaus, Morgan added, and the latest government and credit bureau data shows about 5.8 million borrowers are more than 90 days delinquent. That’s a whopping 31% of all student loan borrowers, according to TransUnion.

“Student loan borrowers of any credit risk tier can find themselves falling behind in their payments and at risk for default, even during a time in which we’ve seen most consumers are managing their debt relatively well,” Joshua Turnbull, senior vice president and head of consumer lending at TransUnion, said in a statement.

How wage garnishment works

Borrowers who face wage garnishment are entitled to a 30-day notice before garnishment begins, but many people miss or misunderstand those communications.

If a student loan borrower is in default, the Education Department can direct employers to withhold up to 15% of a delinquent borrower’s disposable pay until the loan is paid off or is no longer in default status, according to the National Consumer Law Center. 

By law, the government must leave at least 30 times the federal minimum wage per week, which would be $217.50.

“If a collection notice arrives, it’s critical to respond immediately,” Broc Sleek, senior vice president of lending operations at LendKey, told Fortune. “If wage garnishment would create a major hardship, those borrowers should consider requesting a hearing.”

Can you avoid wage garnishment due to student loan default?

Although potential wage garnishment can feel intimidating and stressful, there are some things you can do to potentially avoid or halt garnishment.

One option is negotiating payment plans with the Education Department. There are a variety of repayment options depending on financial status as well as loan terms and conditions. Steve Taylor, director and senior fellow for education and workforce at Stand Together Trust, told Fortune there are some options scaled for low-income borrowers so they aren’t facing excessive burdens.

“It’s important that borrowers stay engaged with their servicers and begin making payments,” he said, “because ignoring loans only increases the risk of falling into collections and wage garnishment.”

Morgan said other options include debt consolidation or rehabilitation—but rehabilitation is only allowed once. This is when borrowers enter an agreement with their student loan servicer, typically after defaulting, that requires the borrower to make nine on-time monthly payments during a 10-month period. Morgan said the minimum payment is $5 per month, but can be based on your finances. 

He has also filed bankruptcy for a few clients who have had student loan garnishments, but said it’s not a long-term solution because it rarely fully dissolves a borrower’s debt in full. 

Bankruptcy “basically [gives you] time to regroup.”

If you do end up having your wages garnished, Sleek said it’s important to be proactive.

“Keep records of all correspondence and request a detailed calculation of how the garnishment amount was determined,” he said. “If self-employed, note that wage garnishment by the government generally does not apply.”